In my first statement to shareholders as Chairman of Prudential, I am delighted to report a strong financial performance with statutory basis operating profit up eight per cent to £840 million, overseas new business achieved profit up 30 per cent to £383 million, new business achieved profit up two per cent to £613 million and record insurance and investment sales of £13.9 billion. These results reflect the strength and diversity of our operations around the world. The Board has decided to increase the total dividend by 6.5 per cent to 24.5 pence per share.

Prudential is a leading international financial services group – a position reinforced by our listing on the New York Stock Exchange in June. We have a clear and focused strategy designed to achieve sustainable growth in our chosen markets. During the course of the year, there were a number of notable achievements that demonstrate the Group's commitment to broadening our product range and distribution capabilities and to delivering shareholder value.

In June, we completed the public offering of a 21 per cent stake in Egg, our internet-based financial services operation.

We have restructured our UK businesses in order to increase productivity and cost effectiveness and enable us to operate competitively in a low margin environment. This reorganisation has led to a clearer customer focus and greater operating efficiency.

The introduction of stakeholder pensions in the UK represents an enormous opportunity for the Group and we are well placed in this market. Both the TUC and British Chambers of Commerce have endorsed our considerable experience in providing pensions, and working with affinity groups, by selecting Prudential as their preferred stakeholder supplier. In October, we also announced that our stakeholder proposition would be accompanied by lower charges for our existing pension customers.

In the United States, Jackson National Life has leading positions in a number of product areas and we have continued to drive forward our strategy of broadening our distribution reach. We also acquired Highland Bancorp, which we merged with Jackson Federal Bank, a wholly-owned subsidiary of JNL. This acquisition has given our banking operation scale and enabled us to broaden our product range to incorporate banking products. In 2000 we also acquired IFC Holdings, the leading bank third-party marketing organisation in the US, which has significantly enhanced our distribution through banks and has further enhanced our broker-dealer network. This acquisition has created the fifth largest independent broker-dealer network in the US.

Our operations in Asia have also made significant progress. Following the launch of Prudential's life operation in Taiwan in 1999, we acquired an 89 per cent interest in a Taiwanese mutual fund company, Core Pacific Securities Investment Trust Enterprise. We launched a joint venture with China International Trust and Investment Corporation (CITIC) in Guangzhou which was one of the first Sino-British life insurance operations in China. Also ICICI Prudential Life Insurance, our joint venture with Industrial Credit and Investment Corporation of India, received a licence from the Insurance Development Authority to commence life insurance operations in India. In January 2001 we announced that we had signed an agreement to acquire Orico Life Insurance Company Limited of Japan.

We are delighted with the progress that has been made by M&G in 2000. As a result of our acquisition of M&G in 1999, and the strong growth we are experiencing in Asia, 25 per cent of Group sales now come from unit trusts and mutual funds.

In mainland Europe, our strategy is to establish distribution alliances and thereby build on our existing partnership agreements with CNP Assurances in France and Signal Iduna in Germany. We have also joined forces with Centre Français du Patrimoine to distribute Prudential Europe Vie, an innovative equity-backed life insurance product that builds on the success of Prudence Bond in the UK. Policy sales began in January 2001. In addition, M&G plans to launch a range of equity and fixed interest funds in Germany in autumn 2001, rolling out to other European markets from 2002 onwards.

None of the progress made by the Group during the year would have been possible without the hard work of our staff. As I have visited our operations around the world, I have been enormously impressed by their commitment, drive and professionalism and I would like to take this opportunity to thank them for all their efforts.

During the year we said farewell to some of our Board and welcomed others. I would like to pay particular tribute to Sir Martin Jacomb, who stepped down in May following five years as Chairman, and to thank him for his enormous contribution to Prudential. I wish him well in his retirement. I am happy to take over from Sir Martin, working with so many talented people, particularly the management team, ably led by Jonathan Bloomer, who succeeded Sir Peter Davis as Group Chief Executive in February . We also said farewell to Michael Abrahams, a director since 1984 and Deputy Chairman since 1991, who retired in May, and Derek Higgs, a director since 1996, who retired in November. Each of them made a significant contribution to the development of the Group and I wish them well for the future.

The Board has welcomed several new members. Philip Broadley joined Prudential from Arthur Andersen in May as Group Finance Director, and succeeded Les Cullen; Roberto Mendoza, formerly with JP Morgan and recently with Goldman Sachs, also joined the Board in May ; and Michael McLintock, the Chief Executive of M&G, joined the Board in September. I am delighted to add that Mark Wood, formerly Chief Executive of AXA UK, will join the Board as Chief Executive of Prudential's UK and European Insurance businesses, on 21 June 2001. I know that all of them will make valuable contributions to the future prosperity of the Group.

The complementary strengths of the management team, with the breadth of experience of the executive board members and the wealth of knowledge and diversification of skills brought to the Group by the non-executive directors, has ensured that Prudential enters 2001 in excellent health.

The markets in which we operate have witnessed tremendous change, bringing with it both enormous opportunities and challenges. Prudential continues to adapt to meet these changes and we now have a significant brand and distribution presence in each of our chosen markets. I am confident that the Group is well placed for the future and that our focus on value rather than volume will enable us to deliver superior investment returns to our customers and to our shareholders.

Sir Roger Hurn, Chairman